December 1, 2022

Tackling world hunger: DSM

Tackling world hunger: DSM

After retreating for several years, hunger is on the rise again, currently reaching around 10% of the world’s population. We believe this is a very important issue and that’s the reason we went through the latest SDG 2 (United Nations Sustainable Development Goal: Zero Hunger) Top 10 list and found DSM, a Dutch chemical company focusing on health, nutrition and materials.

Even though its Obermatt Value rank is at 27, making it rather expensive when compared to its peers, we decided to look into the company and instantly found several points we like. First of all, they are committed to sustainability and plan to reduce their carbon footprint significantly in the following years. Next, we find their products quite interesting: food and beverage ingredients (also ones that help reduce sugar consumption), animal nutrition, personal care products, specialty engineering materials and so on.

DSM is facing issues, though. Due to the rising costs of transport and energy, they have recently announced a halt of production of some of their products in Europe. This shouldn’t be very important if you’re investing for long-term returns.

Let’s look into DSM in more detail.

PRO: The following three points speak for a buy:

  1. DSM produces chemicals and food ingredients that are important for a healthy life.
  2. They are on the Obermatt SDG 2 list, which values their commitment to fight hunger. Obermatt also endorses them for energy efficiency, diversity and employee satisfaction.
  3. We believe in the causes DSM represents. In the future, innovative food ingredients production methods will be more and more important, especially considering the planet's limited resources.

CONTRA: The following three points argue against it:

  1. Quite expensive currently compared to similar companies ranked at Obermatt: the Value rank is at 27. All other ranks, including the Combined rank are green though at 69 (we did additional checks by hand to ensure this funny coincidence is correct), meaning the company is a relatively safe investment with a lot of growth.
  2. They have their ups and downs. Recently, they have had to halt production of several products, mainly animal vitamins, due to the rising cost of transport and energy.
  3. Even though specialty chemical companies are setting their sustainability goals, the production methods may not yet be as green as one may believe. This may turn some eco-savvy investors away from buying into the industry.

DSM is worth a buy, even though it may be a bit expensive. We believe in the company’s causes, especially the fight against hunger and the switch to sustainable food production. This is why we buy it for the Wikifolio for the long run, putting current issues aside.

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